ECO 550 Final Exam Part II

ECO 550 Final Exam Part 2 Strayer University

1. If one-time gains from defection are always less than the discounted present value of an infinite time stream of cooperative payoffs at some given discount rate, the decision-makers have escaped
2. Non-cooperative sequential games can incorporate all the following features except
3. An illustration of a non-credible commitment is the promise
4. To trust a potential cooperator until the first defection and then never cooperate thereafter is
5. A dominant strategy differs from a Nash equilibrium strategy in that
6. Firms that have a cover charge for their customers and charge for each item they purchase as well are exhibiting
7. Which of the following pricing policies best identifies when a product should be expanded, maintained, or discontinued?
8. Vacation tours to Europe invariably package visits to disparate regions: cities, mountains, and the seaside. Bundling, a type of second degree price discrimination, is most profitable when:
9. ____ is a new product pricing strategy which results in a high initial product price. This price is reduced over time as demand at the higher price is satisfied.
10. Third-degree price discrimination exists whenever:
11. Buying electricity off the freewheeling grid at one quarter ’til the hour for delivery on the hour illustrates:
12. Non-redeployable durable assets that are dependent upon unique complementary and perfectly redeployable assets to achieve substantial value-added will typically be organized as
13. Vertical integration may be motivated by all of the following except:
14. Which of the following is not among the functions of contract?
15. When retail bicycle dealers advertise and perform warranty repairs but do not deliver the personal selling message that Schwinn has designed as part of the marketing plan but cannot observe at less than prohibitive cost, the manufacturer has encountered a problem of ____.
16. ____ occurs whenever a third party receives or bears costs arising from an economic transaction in which the individual (or group) is not a direct participant.
17. ____ yields the same results as the theory of perfect competition, but requires substantially fewer assumptions than the perfectly competitive model.
18. The Herfindahl-Hirschman index (also shortened to just the Herfindahl index) is a measure of ____.
19. The lower the barriers to entry and exit, the more nearly a market structure fits the ____ market model.
20. The ____ is equal to the some of the squares of the market shares of all the firms in an industry.
21. The ____ depicts the risk-return relationship in the market for all securities:
22. Any current outlay that is expected to yield a flow of benefits beyond one year in the future is:
23. In determining the optimal capital budget, one should choose those project’s whose ____ exceeds the firm’s ____ cost of capital.
24. The weights used in calculating the firm’s weighted-average cost of capital are equal to the proportion of debt and equity ____.
25. The ____ method assumes that the cash flows over the life of the project are reinvested at the ____.
26. When there is no Equilibrium (or no Nash Equilibrium), we expect that:
27. The Prisoner’s Dilemma involves two spies who are held in separate soundproof rooms. But even if the two spies could communicate, what makes it difficult for them to achieve the cooperative solution (both not confessing)?
28. A key to analyzing subgame perfect equilibrium strategy in sequential games is
29. An illustration of a non-credible commitment is the promise
30. If one-time gains from defection are always less than the discounted present value of an infinite time stream of cooperative payoffs at some given discount rate, the decision-makers have escaped
31. Firms that have a cover charge for their customers and charge for each item they purchase as well are exhibiting
32. Third-degree price discrimination exists whenever:
33. Which of the following pricing policies best identifies when a product should be expanded, maintained, or discontinued?
34. The segmenting of customers into several small groups such as household, institutional, commercial, and industrial users, and establishing a different rate schedule for each group is known as:
35. The following are possible examples of price discrimination, EXCEPT:
36. Which of the following are not approaches to resolving the principal-agent problem?
37. Vertical integration may be motivated by all of the following except:
38. When borrowers who do not intend to repay are able to hide their bad credit histories, a lender’s well-intentioned borrowers should
39. Contracts are distinguished from tactical alliances by which of the following characteristics:
40. To accomplish its purpose a linear profit-sharing contract must
41. The ____ is equal to the some of the squares of the market shares of all the firms in an industry.
42. The sentiment for increased deregulation in the late 1970’s and early 1980’s has been felt 
most significantly in the price regulation of
43. The lower the barriers to entry and exit, the more nearly a market structure fits the ____ market model.
44. ____ yields the same results as the theory of perfect competition, but requires substantially fewer assumptions than the perfectly competitive model.
45. The antitrust laws regulate all of the following business decisions except ____.
46. In cost-effectiveness analysis, constant cost studies:
47. The social rate of discount is best approximated by:
48. In the constant-growth dividend valuation model, the required rate of return on common stock (i.e., cost of equity capital) can be shown to be equal to the sum of the dividend yield plus the ____.

49. The ____ method assumes that the cash flows over the life of the project are reinvested at the ____.
50. Which of the following should not be counted in a cost-benefit analysis?